Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of FlexShopper, Inc. (NASDAQ:FPAY), that sends out a positive message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
FlexShopper Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman of the Board Howard Dvorkin for US$366k worth of shares, at about US$2.57 per share. So it's clear an insider wanted to buy, at around the current price, which is US$2.73. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for FlexShopper share holders is that insiders were buying at near the current price.
FlexShopper insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at FlexShopper Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at FlexShopper. In total, insiders bought US$232k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.
Insider Ownership of FlexShopper
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. FlexShopper insiders own about US$18m worth of shares. That equates to 31% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The FlexShopper Insider Transactions Indicate?
The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in FlexShopper shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 3 warning signs (1 is a bit concerning!) that you ought to be aware of before buying any shares in FlexShopper.
But note: FlexShopper may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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